NO B.S. FRIDAY: Revolution delayed until further notice

The dream of a golden crypto-currency future copped a serious blow this week.

Around 2004 I was presented with an opportunity.

It was a special ‘insider’ offering into a plucky American start up. They had a radical idea – to create a site where people could upload and share videos with each other, over the internet.

I turned it down.

I don’t really remember why. It all seemed a bit risky. The technology was new. They didn’t have a clear direction for how they were going to monetise the service. So I knocked it back.

Was it a mistake?

Hardly. The company went belly up after about 18 months. I would have lost everything.

This company wasn’t YouTube. It was one of about a hundred companies aspiring to be YouTube at the time.

YouTube just won the race. I don’t even think they were the first to get their product to market. But with three of PayPal’s exec’s at the helm, they were able to scale rapidly, until they became the dominant player in an ecosystem that was only ever going to support one player.

It’s one thing to have a million dollar idea. It’s another to have a million dollar business.

And so when I was presented with that investment opportunity back in 2004 or whatever it was, I had no way of knowing if they had a good business. They had a good idea, sure, but beyond that, I just didn’t have enough info to tell.

And I don’t like to take risks with my money. So I knocked it back.

It’s the same story with all the crypto-currency stuff.

Someone asked me my opinion about it the other day. Sure, I get the power of block-chain. I get the revolution it has the potential capacity to deliver. It could be a whole new ball game.

But what is it going to be? Which “coins” are going to dominate the market? We hear a lot about Bitcoin and Ethereum, but there are hundreds of crypto-currencies out there.

Like, did you know there’s a thing called ‘Potato Coin’? This one aims to become a unit of currency for poor African farmers (a noble aim).

Or what about ‘Wankcoin’? (Seriously, I’m not making this up.) This is designed to help porn-enthusiasts support their industry.

Someone has even launched ‘Ponzicoin’ – and people are actually buying it.

The whole alt-currency world is very weird. And as far as I can tell there isn’t a way to buy an exposure to block-chain currencies at a concept – you have to invest in individual coins.

It’s like in back in 2004 – if I could have invested in the concept of video-sharing over the internet, it would have been a no brainer. The need was obvious, and technology was certainly heading that way.

And you would have made a motza.

But you can’t invest in concepts. You can only invest in companies.

And that introduces a whole lot of complexity and uncertainty.

And they’re concepts I just don’t like to see attached to my investments. I’m a simple guy at heart.

Anyway, there was some other news this week that has made me rethink the whole crypto currency proposition.

What news?

Yep, one of the largest investment banks in the world, and depending on what conspiracy theory blog you subscribe to, is responsible for AIDS and faking the moon-landing. They’ve just brought out their own currency.

They’re calling it SETLcoin, and it aims to help parties settle share transactions. There’s a niche here. Currently it can take up to three days to settle a share trade. SETLcoin will make it instantaneous.

I was excited about crypto-currencies when I thought they were being built by 14-year old Japanese boys in their bedroom on retro-fitted Sega-64. But if we’re talking about one of the wealthies banks in the world?!?

That’s an entirely different story.

But I guess when you step back and look at it, it was always going to go this way wasn’t it? Money is power, and the powerful aren’t just about to let money get ‘democratised’ out of their control are they?

To be honest, I’m feeling a little deflated today.

I feel like it’s similar the revolution going on in the media. Traditional newspapers are dying. Their readership is too broad, their business models obsolete.

But rather than getting agenda and vested-interest free micro media – media created by the people for the people – we’re getting fake news. We’re just getting BS.
Apparently a bunch of those fake news sites in the last US election were just built by bored kids in Serbia, just looking to make a buck.

And crypto-currency, rather than democratising money, could just be about to concentrate it in hands even less accountable than our governments (low bar I know).

That’s not going to be an improvement.

And as strange as it is to say, I think I prefer a government controlled money to money controlled by Goldman-Sachs, or whatever global financial powerhouse it ends up being.

Suddenly, I’m pro-government?!?

Oh dear, oh dear.

Turns out that revolution I was waiting for… well, looks like it’s going to be a little further off than I thought.

Comments

crypto currencies are, at the moment, measured in value against established currencies : us dollar etc. if there are no currencies what do we value these bitcoin, etheremuel etc. against.

imagine you have a bitcoin(current value US$2,500) and you want to buy a kg of butter value u.s. $5.00..how the heck does one pay for it, or anything else for that matter? you say to the checkout chick hey just nip a bit of this bitcoin off to pay for the butter:-)

cryptocurrencies are a 7 day wonder and a rebelion against the establishment ..but you know how those go..if you know history. you are right governments must always be the custodians of finance.

Jon, You must be living in a Dream world with complete ignorance. Sorry being so blunt. Please learn from a 12 years old girl. Also other sources show who own and control our money and lives in a CORPORATE Australia…

hi edd..about time somebody else wrote about the fed and its ‘branches’. who controls oz? give you one guess. america sneezes we catch cold. we dare not upset them..even when one of their ‘cops’ kills one of our citizens and does a ‘cover up’. well even malcolm is upset about that one. more power to him. one final word about cryptos..its a buzzword now…but it will die a ‘natural’ death when we become a cashless society…not too far away by the looks. then the black market will thrive like never before..especially amongst the ‘elite’ any bets?

My understanding so far about crypto currencies is that they will go through a shake up as economic and monetary systems go through turbulences. It seems that Cryptos are real threat to DYING fiat monetary system. I recommend Clif High on cyrptos (www.halfpasthuman.com) Time will tell what happens in the future!

Thanks for answering my question on your blog, Jon. It’s a good analogy, and a well thought out answer. Even so, I believe there is more to the story, and also a slight misconception of how crypto currencies work. I’m still learning, but I’ll try my best to explain what I mean.

First of all, these hundreds of crypto-currencies (so called) aren’t actually vying for a single winner-takes-all audience, like with YouTube. They are not competing with each other to become the best currency – Highlander style. They have different uses in different ecosystems. Yes – pot, porn, and potatoes. Unlike one steaming video company to rule them all – they are essentially in different industries, doing different things, and they use their respective coins essentially as shares in their company. Granted, some of them are currency-only coins, but the others are better imagined as start-ups than currencies. When they release these ‘coins’, people are investing in their idea, and team behind the idea. Instead of IPOs, they have ICOs. For example, SiaCoin is actually a cloud storage system like Dropbox but without a middle man. The new technology that empowers these brand-new business ideas is the invention of the blockchain. Like the invention of the internet, they have an amazing new tool to do things which were impossible before. For the sake of this thread, I’m not interested in these start-ups.

Money is one of these uses – the main one – but there really are only a few Cryptos which are trying to be like traditional currencies. If you were looking to invest in the idea, rather than a specific company, then you are basically talking about Bitcoin. Bitcoin is the currency of the internet. Almost all of the other ‘coins’ are pegged against Bitcoin – they usually go up and down in price together. Bitcoin is best compared to other fiat currencies (like USD or AUD) with those companies built on top. And as you know, there is a lot of money in money . So what we’re talking about is a system that can compete with banks, across countries, and without messy things like inflation, quantities easing, and interest rate manipulation. Sure, banks can create their own blockchains, but now they have competition which costs basically nothing.

very enlightening. thanks.
sounds like BTC is already worldwide, so the question is whether it will be the only one? Possible, but we’re talking about a pretty radically different monetary and political order…

You’re totally right. It’s radically different. But in a world run by money/capitalism, surely the path of most profit for least cost, tax, and regulation will win. Especially if/when the USD/petrodollar starts caving. If there is another GFC, even in 10 years, things might pan out differently.

Hey Jon! Ha, I go on holiday for 2 months, and you’ve not only joined us on the dark side, you are running crypto seminars! Good for you 🙂 Welcome. And good timing joining right when there is such a great buying opportunity. Maybe we should catch up one day. I’ve been a fan for years, and would be honored to have a coffee.

i can’t resist this one. i went to a real estate seminar yesterday with the main topic being the laws, more of them(myriads) pertaining to strata titling. its a mind boggling exercise. but notwithstanding that the speaker touched on the overseas investor tax on the sale of properties of $2,000,000 and over, now to be $750k or over cos as you know there aren’t too many properties in sydney or melbourne below $750k! (none of yours would be i bet:-)

that law will now extend to ALL properties $750k and over irrespective of ownership; that is oz citizens as well, and this will surely open many cans of worms. you see, to avoid paying the 10% tax you, as owner will need to apply for an exemption from the a.t.o., prior to sale, and present it to the conveyancing officer who will settle your transaction. and this applies to all properties where a vendor has entered into a contract after 1st july 2016! post natal trauma? if you, as vendor, do not provide the necessary clearance certificate from the a.t.o. and do not provide your settlement agent with such certificate, BINGO they will have to withhold 10% of the proceeds of the sale. nice. we cannot have the purchaser landed with this lovely tax can we? then the bogeyman arises. taxation office clearance you say? wow, i wonder how many nefarious activities will be uncovered by this requirement?. this latest intrusion into our affairs is just another sneaky way to catch tax evaders in contrast to tax avoiders. lol

so wallah, we have bitcoin to the rescue! maybe bitcoin etc. is a way of avoiding capture. who knows?

all in all it seems that the oz public and every other public in the known western world will be up for this. i don’t know, but i reckon this whole western society is being put on the ‘rack’. what’s your take on this jonno? will you avoid capture or will you just not sell anything?

cheers, ron from west oz

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